Estate agencies shut 150 branches a week

Estate agencies are closing branches at the rate of 150 a week, with 4,000 job losses since the start of the year.

The number of estate agency branches has fallen from about 13,000 at the start of the year to about 12,000Photo: GETTY IMAGES

By Harry Wallop and Gordon Rayner

12:05AM BST 06 May 2008

Removal firms have also laid off hundreds of staff after a 26 per cent fall in the number of properties changing hands over the past 12 months.

The job losses are the clearest sign yet of the impact the global credit crisis and housing market slowdown have had on the wider economy.

This led to warnings yesterday that unless banks and building societies increase lending to mortgage applicants, worse may be to come.

The number of mortgages approved for home buyers has fallen by 44 per cent in 12 months to its lowest level since the Bank of England began collecting data 15 years ago.

Without access to mortgages, potential home buyers cannot move house, meaning a sharp fall in business for any company that depends for its trade on people wanting to move. Estate agencies have been particularly badly hit.

Debtwire, an organisation that monitors the health of companies, said the number of estate agency branches had fallen from about 13,000 at the start of the year to about 12,000. The rate of closures is accelerating and presently stands at 150 a week.

Sources in the field said that with each branch employing an average of four people, the number of job losses was about 4,000.

Peter Bolton King, the chief executive of the National Association of Estate Agents, said: "The irony is that there is no shortage of people who want to move house, but without mortgages they just can't do so.

"Estate agents are having to close because there just isn't enough movement in the housing market and that is likely to have a much wider impact because a healthy housing market is essential for the health of the high street.

"When no one is moving, the negative feeling that creates tends to make people tighten their purse-strings.

"The only way things will improve is when banks and building societies start to open up their lending criteria so people can borrow money and then the housing market will start moving again."

Countrywide, the largest estate agency group – including Bairstow Eves, Gascoigne-Pees and R?A Bennett & Partners – has shed 50 branches since last year and is preparing for more cost-cutting.

The company said it would need to close more branches after completed sales fell to about half of 2006 levels.

Spicerhaart, the third largest estate agency group, closed nine branches in southern England and Wales last week.

LSL, which owns the national Your Move chain and the northern-based Reeds Rains, has closed 12 offices with a loss of 315 jobs.

Kirsty Allsopp, the founder of the Kirmir property search company and the presenter of related television programmes, said: "If Tesco suddenly sold 26 per cent less food tears would be shed.

"That's what is happening in the housing market and it is starting to have an impact on DIY shops, on removal men and estate agents.

"I know not many people will sympathise with estate agents losing their jobs, but the economy needs a housing market that is ticking over steadily."

Simon Bond, of O'Riordan Bond, said: "We started the year with 26 branches in Northamptonshire and Milton Keynes and we now have 22. Our volumes of transactions are down at least 50 per cent."

Andrew Dewar, of Curchods estate agents in West Horsley, Surrey, said it had not closed offices but had shed staff.

"I fear we are only at the tip of the iceberg and worse is to come," he said. "The industry has had its head in the sand, hoping spring would make it all right. But spring hasn't sprung yet, and won't, either."

Last week, three leading house price indices showed that prices had started to fall in earnest, with property values lower than a year ago.

But Jeremy Leaf, a north London estate agent and leading member of the Royal Institution of Chartered Surveyors, said falling prices were not the reason for jobs being lost.

"If prices drop it's not a big deal for us. If anything it might help encourage buyers," he said. "What we need are people coming in through the door. And the pace of transactions is really falling sharply."

Mortgage lending has been affected by the worldwide credit crisis, with first-time buyers particularly badly hit.

A year ago many lenders offered 100 per cent mortgages, but now most will give only 90 per cent. This means a first-time buyer needs an average of £25,000 to cover a deposit, stamp duty and other fees.

As well as 100 per cent and even 95 per cent mortgages being withdrawn, interest rates have risen, making the cost of borrowing prohibitively high for many first-time buyers.

The British Association of Removers said yesterday that hundreds of workers had been laid off as the trade went through its worst period in 20 years. Business in the first three months of this year was down 40 per cent on last year.

Steve Jordan, an association spokesman, said: "The removal market is as bad as 1989-90 and possibly worse."

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